- Prosus has written off its 9.6% investment in Byju's, valuing the stake at zero due to significant declines in the company's equity value.
- Despite the financial challenges, Prosus Group CIO Ervin Tu expressed a hopeful outlook for Byju’s future, emphasizing the need for improved governance at the Indian edtech firm.
Prosus, which holds a 9.6% stake in Byju's, reported in its quarterly update that it has written off its investment in the edtech firm as having zero value, attributing this to a substantial decline in equity value.
According to a report, Prosus Group CIO, Ervin Tu, maintained a hopeful outlook for Byju’s future on an earnings call. However, he highlighted that enhancing governance at the Indian company is essential for its recovery.
“A fair value loss of $493 million was recognized in other comprehensive income in the current year,” Prosus stated in a stock exchange filing in the Netherlands.
With stakes in firms like Tencent, Delivery Hero, Swiggy, and Stack Overflow, Prosus has poured over $570 million into Byju's. In fact, the Indian edtech company's valuation reached $22 billion in early 2022.
However, Byju’s has experienced a decline since then following various business challenges, including allegations of misselling and substantial unpaid debts.
Last year, the South African-Dutch investor slashed its valuation of Byju’s to $5.1 billion. Later, in November, Prosus further reduced Byju’s valuation to $3 billion.
Additionally, earlier this month, BlackRock disclosed that its investment in Byju's, once valued at $22 billion, is now considered worthless.
This follows a challenging year for the Bengaluru-based startup, which struggled with governance issues and missed its financial reporting deadlines last year. According to reports, Byju's failed to meet its revenue targets by over 50% and disrupted plans for a $1 billion fundraising effort.
Not to mention, Prosus also criticized the startup for often ignoring its advice. Amid a financial strain, Byju’s managed to secure $200 million in funding this year at a post-money valuation of around $250 million, but this investment is now being contested legally by some of its key investors.
Meanwhile, the Indian edtech major is also fighting various legal battles. Four investors have accused its management of mismanagement and poor governance.
Also, the National Company Law Tribunal (NCLT) has instructed Byju's to keep funds from its latest rights issue in a separate account while the legal issues are resolved. In response, Byju's has filed a writ petition with the Karnataka High Court to contest the NCLT's directive to pause its rights issue.
Edited by Harshajit Sarmah
